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Access to external finance is a key challenge for the creation, survival and growth of SMEs. This article delves into the "weak funding" handicap of rural small firms (SEs): the access to bank financing and the substitutive role of trade credit for entrepreneurs in rural areas when they faced bank credit constraints. Considering SEs in Galicia (Spain), a paradigmatic case in Europe of rural areas in demographic decline with a strong impact of the Spanish sovereign and banking crisis of 2008-2012. There's evidence of firms in rural areas facing a differential negative flow of bank credit during the financial crisis, especially in the manufacturing and construction sectors, that dissipated afterwards. Then, using a panel data approach that considers the determinants of trade credit, the complementary and substitutive hypotheses are tested to estimate the impact of bank credit restrictions over trade credit. [ABSTRACT FROM AUTHOR]

Using a database on innovation activities by Spanish firms, we perform an exploratory analysis on a frequently overlooked area of research: innovation investment decisions by small firms in rural areas where socioeconomic indicators are weak. We focus on two quite different sectors of interest there, agri-food and t-KIBS firms, to explore how the regional context influences the capacity and the nature of innovation. Following the TOE approach as a conceptual framework, we perform a multivariate statistical analysis based on MCA and PCA combined, to identify the most relevant factors among a list of 73 indicators in four broad domains, including innovation decisions as well as organizational, technological, and environmental determinants. The exploratory results obtained suggest an open field of research. Thus, we observe a distinctive behavior of marketing innovation by agri-food firms that is related to former ICT experience, whereas services innovation by t-KIBS would be related to the objective of entering new market niches. Some results confirm previous results for SMEs outside rural areas, such as financial constraints, lack of qualified personnel, and strong competition being relevant barriers to invest in R&D by t-KIBS firms. Contrariwise, we dispute the assertion that agri-food firms are primarily oriented toward product and process innovation: what comes together is product and organizational innovation. [ABSTRACT FROM AUTHOR]

The natural experiment provided by the opening of a section that completed the A8 motorway in Mariña de Lugo, a rural area in Galicia (Spain), offers an opportunity to identify whether spread or backwash effects in economic activity are observed. The new section directly affects only a small strip of the territory—where the transition from the inland rural areas to the more dynamic coastal area takes place. This allows us to test a separate dual inner‐coastal socio‐economic performance after the opening of the new road—an analysis that has rarely been performed for rural areas in developed countries. We study the impact over population growth, employment and business financial results, using the differences‐in‐differences approach. The results we obtain are consistent with the spread hypothesis for the nearest municipality to the new road section, while the spread effects did not disseminate to the neighbouring municipalities. These global results hide a different performance at the sector level, positive for transport and manufacturing companies, and negative for retail firms and hospitality. [ABSTRACT FROM AUTHOR]

The depopulation process of rural areas in Europe during the last decades is widespread. However, in many regions, this performance is largely an inheritance from past migration and the drag it causes in terms of an ageing population structure. Removing the inertial effects of past migration, we may find a much greater diversity in the current demographic dynamics of rural areas. We analyse the case of Galicia, a NUTS-2 region in Spain that represents a paradigmatic case of traditional emigration. We remove the drag from past migration to obtain the population performance of rural counties once the effects of that inertia were removed, and interpret the results. The analysis works as a descriptive tool: refined data help to identify which rural areas, however they continue to lose population, are being able to slow down or even revert the processes of depopulation inherited from the past. Finally, we explore possible explanations for such better performance, verifying that this is mainly related to key factors in regional planning and development such as the proximity to urban nodes and the quality of connections. [ABSTRACT FROM PUBLISHER]